Drinking Milk Products in Vietnam

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Executive Summary

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TRENDS

While drinking milk products made strong progress in 2016-2017, the category saw increasing competition from alternatives. Vietnam Dairy Products JSC (Vinamilk) introduced a new organic milk brand at the end of 2016, which was certified by the USDA (United States Department of Agriculture). Its marketing campaign was very active through various media such as television; consumers could easily find TV ads reserved for this new product on popular channels such as HTV, in addition to adverts in newspapers and on the internet. The launch of Vinamilk’s new product, although its impact may not be directly significant in 2017, signals a rise in consumer sophistication as they discern between healthy products. In addition to the expansion of the organic milk consumer base, other milk alternatives have attracted greater interest, with big brands launching non-dairy products as well.

COMPETITIVE LANDSCAPE

Vietnam Dairy Products JSC (Vinamilk) continued to rank first in drinking milk products in the country in the review period; it represented 40% and 41% of value sales in 2016 and 2017 respectively. Being one of the rare Vietnamese companies to be named among Asia Pacific’s largest publicly traded companies by Forbes Asia magazine, Vinamilk possesses many competitive advantages including a good reputation, strong financial ability, active new product developments backed by good marketing and promotional activities, a diverse product portfolio and a nationwide distribution network. With the introduction of its organic milk at the end of 2016, the company also claimed that it possessed the very first 100% organic farm, which follows European standards, in Da Lat city. As a result, the company recorded the fastest retail value growth in 2017.

PROSPECTS

Rising health-consciousness and greater sophistication among consumers are expected to make buyers more discerning about what they consume over the forecast period. This will result in increasing interest in other milk alternatives, as consumers will become more familiar with the differences between cow’s milk, goat milk, soy milk, corn milk, rice milk etc. This rising interest will also be driven by the intensifying competition within drinking milk products, as the availability of different types of milk is expected to inspire consumers to make more informed choices. Another driver for the improving awareness of drinking milk products is the introduction of organic milk by Vinamilk. TH Food Chain JSC is expected to launch a similar product in the forecast period. In March 2017, the company claimed that its TH true farm in Nghe An Province is an organic farm based on US and European standards. These investments by two of the main players are expected to reap positive responses from consumers. However, organic milk is not predicted to post significant sales over the forecast period, as the premium pricing of organic products limits strong mainstream consumption.

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